WASHINGTON–U.S. Senators Chris Murphy (D-Conn.) and Mike Braun (R-Ind.), both members of the U.S. Senate Health, Education, Labor, and Pensions Committee, on Tuesday introduced legislation to strengthen consumer protections and improve transparency for medical debt practices. The Strengthening Consumer Protections and Medical Debt Transparency Act would require health care entities to communicate with consumers about any medical debt that is owed and reform collection practices. It would also direct the U.S. Department of Health and Human Services (HHS) to create a public database that collects information from health care entities about their debt collection practices.

“No one should be forced into bankruptcy simply because they got sick. It’s unconscionable that there are hospitals willing to sue patients, seize their tax refunds, and even withhold care in order to get paid. This newly bipartisan legislation would protect patients from many hospitals’ overly aggressive, exploitative debt collection practices and bring some much-needed transparency to the industry,” said Murphy.

“Many Americans are struggling with medical debt, and more transparency between health care entities and consumers about what medical debt is owed is a simple step in the right direction,” said Braun.

A report from the Kaiser Family Foundation found that medical debt was a widespread issue impacting an estimated 41% of Americans — or about 100 million adults. The report also found that in their efforts to pay what was owed, adults report making “a number of sacrifices and enduring substantial financial consequences.” And those with lower incomes and people of color were more likely to report being contacted by collection agencies, being denied subsequent care, or changing their housing situation to pay down their medical debt.

The Strengthening Consumer Protections and Medical Debt Transparency Act would require that:

  • HHS creates a publicly available database of annual reporting from hospitals, freestanding facilities, and large provider practices with information about whether they use collection agents, the process for assigning debt to a collection agent, and the number of Extraordinary Collection Actions, as defined by the IRS, they have initiated. HHS will maintain a public list of any health care entity that does not submit the required information each year.
  • Before an entity can send debt into collections, health care entities should ensure that all insurance coverage appeals have been resolved and determine whether the patient qualifies for assistance.
  • Health care entities, or their contracted debt collection agencies, shall not enter into extraordinary collection until 180 days after an initial bill is sent and the debtor’s identity has been confirmed.
  • Health care entities provide the patient with an itemized statement of the debt owed as well as detailed receipts of payments made within 30 days.
  • A health care entity or its agent who fail to comply with changes under the Act is liable to the patient for actual damages and up to $1,000. In the case of a class action suit, damages are the amount each plaintiff could have recovered, not to exceed $2 million. If the patient is successful, then attorney’s fees and other costs also can be recovered.
  • The Consumer Financial Protection Bureau (CFPB) issue a biennial report on medical debt and review the public database for its application to the CFPB’s risk supervision program.

“Medical debt is different from all other forms of debt. Medical care is involuntary and not optional. Also, patients usually have no way of knowing the price before they buy. That’s why people who owe medical debt deserve the additional, common sense protections proposed in this bill, such as an itemized statement, or having the debt collector verify that there is no charity care or other aid program that could help the family. Families struggling with the physical and emotional toll of serious disease or injury deserve to be treated with basic fairness and dignity by medical debt collectors, and this bill goes a long way toward making that a reality in Connecticut and all over America,” said Ted Doolittle, Connecticut’s State Healthcare Advocate.

“The driving force behind the medical debt crisis is simple: health care is far too expensive and there aren’t enough protections in place for people seeking care. Nobody should be forced to make the impossible choice between getting health care and going into debt, but for far too many people in America, this is the reality,” said Emily Stewart, executive director of Community Catalyst. “The Strengthening Consumer Protections and Medical Debt Transparency Act puts important protections into place that provide more transparency on collection practices and work to curtail harmful collection practices. While medical debt impacts everyone, including those with health insurance, the impact is felt most amongst communities that already face barriers to care due to racism, classism, and other forms of oppression. We applaud Senators Murphy and Braun for their efforts to build bipartisan support for this bill and urge for swift passage.”

Full text of the bill is available here.

A one-pager of the bill is available here.

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